Concessions Deal Leaves OT In State Pension Calculations Through 2022

August 21, 2011|By Jon Lender, Government Watch

State unions' ratification of a big wage-and-benefits concessions agreement chased away the specter of thousands of layoffs and cuts in services, but it didn't erase the increasingly noticed issue of state workers' pensions being inflated by massive overtime payments.

On Thursday, state employee unions announced that, on the second try, they had voted to ratify the concessions agreement that Democratic Gov. Dannel Malloy called "historic" — ending two months of political turmoil.

On Friday, Senate Republican leader John McKinney criticized Malloy for saying after the unions' announcement that he wouldn't push House leaders to pass a bill to exclude overtime pay from the calculation of state employees' pensions — a bill that Malloy supported when the Senate passed it more than a month ago.

McKinney said in an interview that Malloy "has said that he's different, … a real leader who takes charge… and will push forward with reforms" — but now it looks as if "he's engaged in politics as usual" and not really committed to the pension-calculation reform.

"His unwillingness to support this legislation proves that it was used as political pressure" to get the employees to ratify the concessions deal, McKinney said. The same goes for the 3,000 or so layoff notices the administration issued, he said, as well as the cuts to services and municipal aid listed in one of the governor's austerity budget proposals.

Malloy lieutenants responded later Friday that although the administration was unsuccessful in changing the pension calculation system for the state's current work force of more than 45,000, the concessions agreement represents significant progress in reducing pension costs. Changes such as increased penalties for early retirement and making employees work longer before retiring are part of health and retirement savings that will amount to $21.5 billion over 20 years, they said.

Malloy's senior adviser, Roy Occhiogrosso, responded: "On behalf of Connecticut's taxpayers, Gov. Malloy has pushed more change and reform through this building in the past eight months than the last two Republican governors did in 16 years. And there will be more over the next few years. The agreement that he negotiated with the state employee unions represents the most fundamental restructuring of the relationship between the state and its workforce that's ever occurred. Is it perfect? No. Is it better than anything anyone here's ever seen. Yes — by a lot."

The fact remains, however, that state employees, particularly those in police and prison jobs, often work extraordinary amounts of overtime hours to inflate their paychecks during the three high-earning years on which their pensions are ultimately calculated. The practice is prevalent among thousands of "hazardous-duty" employees — such as state police, correction officers, and nurses who work in state prisons — who can retire after 20 years at any age.

Pumping up the pension-based years' salary is so much a part of the hazardous-duty work culture that some of these employees will refer to "my three high years" in casual conversation, even with a newspaper reporter.

Back in June, when the state employee unions rejected the concessions agreement, Malloy proposed that legislators pass the bill to calculate pensions only on the basis of regular salary, with no overtime padding.

The Senate passed the bill in a special legislative session, with McKinney's vocal support. But Democratic House Speaker Christopher Donovan of Meriden refused to bring it up in the House for a vote, saying he would keep it on the legislative calendar for possible revival if unions did not vote for a second time and ratify the concessions agreement.

On Thursday, after the unions announced that they had indeed ratified the deal, Malloy was asked at a press conference what should now happen with the bill in the House. He responded that he no longer saw any "necessity" for the bill — even though the concessions deal would extend the current, often-abused calculation system through the end of unions' health-and-retirement benefits contract in 2022. The old contract, which includes the same pension calculation provisions, would have run out in 2017.

Political insiders noted that if Malloy now pushed for House action on the bill, he would have made things difficult politically for Donovan — because state employee unions had opposed the change in pension calculation and Donovan needs their support in his quest for the 2012 Democratic nomination for the 5th District seat in the U.S. House of Representatives.

Malloy went on to say Thursday that the concessions agreement would change the pension calculation method for new employees hired since July, basing it on their last five years' salaries instead of their highest three. But that leaves tens of thousands of employees who could retire under current conditions by 2022.